Appreciate your feedback on the impact of Provident Fund amendment on increasing the wage ceiling to employees who are in Union ie who have a Long term settlement in place.
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There is hardly any impact on workers alone because LTS is between them and the employer. The increase in contribution or the subsequent reduction in the take-home salary is not due to any act on the part of the employer, but it is a result of the operation of the state law. Normally, the LTS will not address statutory contributions.
For example, if there is a provision in the settlement that the PF contribution will remain the same throughout the settlement period, it will not be binding since it goes against the law. You cannot have a settlement that contradicts the law. Even if the employees agree that they are content with a lesser PF, it will not be enforceable. Therefore, LTS will take its course, while the new amendments in any law will have their own impact.
Regards,
Madhu.T.K
From India, Kannur
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4526For example, if there is a provision in the settlement that the PF contribution will remain the same throughout the settlement period, it will not be binding since it goes against the law. You cannot have a settlement that contradicts the law. Even if the employees agree that they are content with a lesser PF, it will not be enforceable. Therefore, LTS will take its course, while the new amendments in any law will have their own impact.
Regards,
Madhu.T.K
From India, Kannur
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My view is as follows:
Impact of Provident Fund Amendment on Employee Take-Home
There will be an impact of this amendment on employee take-home pay, whether they are unionized or not, regardless of the presence of a long-term settlement (LTS). In the majority of cases, the current Provident Fund (PF) contribution/deduction is capped at Rs. 780. This contribution is set to increase now as salaries are being raised and exceeding Rs. 6,500.
Impact on Excluded Employees
Additionally, a majority of excluded employees will now fall under the PF bracket. Their PF deduction will be a maximum of up to Rs. 1,800. Currently, they are not contributing anything. This change will have a significant impact as take-home pay will be substantially reduced.
It is important to remember that this contribution represents savings for employees with good returns.
Impact on Employers
In my opinion, the impact on employers is quite significant. Some employers are manipulating the term Cost to Company (CTC) and restructuring it to offset the impact.
Regards.
From India, Mumbai
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Impact of Provident Fund Amendment on Employee Take-Home
There will be an impact of this amendment on employee take-home pay, whether they are unionized or not, regardless of the presence of a long-term settlement (LTS). In the majority of cases, the current Provident Fund (PF) contribution/deduction is capped at Rs. 780. This contribution is set to increase now as salaries are being raised and exceeding Rs. 6,500.
Impact on Excluded Employees
Additionally, a majority of excluded employees will now fall under the PF bracket. Their PF deduction will be a maximum of up to Rs. 1,800. Currently, they are not contributing anything. This change will have a significant impact as take-home pay will be substantially reduced.
It is important to remember that this contribution represents savings for employees with good returns.
Impact on Employers
In my opinion, the impact on employers is quite significant. Some employers are manipulating the term Cost to Company (CTC) and restructuring it to offset the impact.
Regards.
From India, Mumbai
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LTS cannot stipulate any clause with regard to statutory payments, etc., as applicable, which is contrary to law. Even if it contains any such clauses that are agreed upon by employees, it will not be tenable in the eyes of the law. Hence, statutory payments/applicable laws will be enforceable, including the recently amended PF Act.
Due to the amended PF Act, employees will have to contribute a higher amount as PF contribution, resulting in a lesser net payment of salary per month. However, alternatively, they will benefit as the employer will be depositing a higher amount of contribution.
In spite of the above, if there are any problems on the part of employees in understanding the situation, it will be the responsibility of the Management to apprise them of the benefits from a social security point of view. Of course, HR will play an important role in making this happen smoothly.
Regards,
From India, Calcutta
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Due to the amended PF Act, employees will have to contribute a higher amount as PF contribution, resulting in a lesser net payment of salary per month. However, alternatively, they will benefit as the employer will be depositing a higher amount of contribution.
In spite of the above, if there are any problems on the part of employees in understanding the situation, it will be the responsibility of the Management to apprise them of the benefits from a social security point of view. Of course, HR will play an important role in making this happen smoothly.
Regards,
From India, Calcutta
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Coverage of construction & contact workers under PF 22.1.2015.pdf
PF notfications - International Workers.doc